Global Partners LP

Greetings and welcome to Sunoco LPS fourth quarter and full year 2023 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Starzy on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Scott Grishel.

Thank you. You may begin. Thank you and good morning, everyone.

On the call with me this morning are Joe Kim, Sunoco LP's President and Chief Executive Officer, Carl Sayles, Chief Operations Officer, Dylan Bramhall, Chief Financial Officer, Austin Harkness, Chief Commercial Officer, and other members of the management team. Today's call will contain forward-looking statements that include expectations and assumptions regarding the partnership's future operations and financial performance. Actual results could differ materially, and the partnership undertakes no obligation to update these statements based on subsequent events. Please refer to our earnings release, as well as our filings with the SEC for a list of these factors. During today's call, we will also discuss certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted. please refer to the Sunoco LP website for reconciliation of each financial measure. 2023 was a record year for the partnership. The combination of a strong and stable base business coupled with a proven history of financial discipline has allowed us to, yet again, deliver on the expectations we lay out each year. I would like to start by looking at some of our fourth quarter and full year 2023 highlights. Adjusted EBITDA for the fourth quarter was $236 million compared to $238 million a year ago. The partnership sold over 2.2 billion gallons in the fourth quarter, up 11% from the fourth quarter last year. Fuel margin for all gallons sold was 12.3 cents per gallon compared to 12.8 cents per gallon a year ago. Total fourth quarter operating expenses were $145 million. an increase of $7 million from the same period last year. During the fourth quarter, we spent $50 million of growth capital and $33 million in maintenance capital. Fourth quarter distributable cash flow as adjusted was $148 million compared to $153 million in the fourth quarter of 2022, yielding a current quarter coverage ratio of 1.6 times. On January 25th, we declared an 84.2 cent per unit distribution, consistent with last quarter. The stability of our business and history of delivering results continues to support a secure and growing distribution for our unit holders. Turning to the balance sheet, at the end of the fourth quarter, we had approximately $400 million outstanding on our revolving credit facility, leaving approximately $1.1 billion of liquidity. Leverage at the end of the quarter was 3.7 times, below our long-term target of four times. As I mentioned earlier, 2023 was a record year for the partnership. We met or exceeded expectations in our guidance metrics, further reinforcing our record of delivering on expectations. Full year 2023 adjusted EBITDA was $964 million, a 5% increase versus the prior year. Fuel volume was over 8.3 billion gallons, up 8% versus 2022's volume, and the largest reported in the partnership's history. Fuel margins continued to remain strong at 12.7 cents per gallon, flat to 2022 levels. Total operating expenses were $550 million, in line with our revised guidance range. Finally, our full-year coverage ratio of 1.8 times and leverage ratio of 3.7 times support key elements of our capital allocation strategy to maintain a secure distribution and protect our balance sheet. I'd like to wrap up my comments by briefly reviewing the series of strategic transactions we announced in January. First, the acquisition of two European product terminals from Zenith Energy for 170 million euros, including working capital. We plan to close this transaction by the end of the first quarter and fund it with availability on our revolving credit facility. We expect the acquisition to be accretive to our unit holders in the first year. Next, the divestiture of our West Texas marketing assets to 7-11 for approximately $1 billion. This transaction is expected to close in the second quarter of 2024 and will allow Sunoco to materially reduce leverage, positioning us favorably for future growth. And finally, the acquisition of NuStar Energy in an all equity transaction valued at $7.3 billion. We expect this acquisition will close in mid-2024. With that, I will turn the call over to Carl to walk through some additional thoughts on our fourth quarter performance and commentary on our recent announcements.